Corporate Transparency Act Kicks In Soon

Small companies, corporations, LLCs, or similar entities registered to do business in the US that meet the definition of reporting companies under the Corporate Transparency Act must comply with the Act starting January 1, 2024.

Reporting companies must submit a report to FinCEN that identifies each “beneficial owner” and “applicant.” A beneficial owner is an individual who exercises “substantial control” over the entity or owns or controls not less than 25 percent of the ownership interests.

Substantial control means serving as a senior officer of the reporting company, having authority over the appointment or removal of any senior officer, a majority of the board of directors, or directs, determines, or has substantial influence over important decisions made by the reporting company.

Exempt are entities that employ more than 20 full-time employees in the US and filed federal income tax returns reflecting more than $5,000,000 in gross receipts or sales. Entities that are subject to government oversight through various regulatory structures are exempt as well.